Understanding the Rising Cost of Health Care

May 5, 2014

The cost of health care has been rising faster than other sectors for decades, to the point where today, one of every five dollars is spent there.  But exactly why that is, has not been well understood, until now.  

Researchers from Virginia Tech and American University looked at health spending costs in this country from 1980 to 2006; one of the longest studies of its kind. They found it wasn’t an increase in the incidence of disease, although that has risen slightly.  The biggest jump caw in the cost of treatment: spending on in patient and outpatient care, office visits, labs and drugs. But looking for ways to cut those costs raises complex human issues. It’s the newest medical breakthroughs, which often save more lives and which are also often the most expensive.  Ana Aizcorbe is Research Professor at the   Virginia Bioinformatics Institute at Virginia Tech. She co-authored the report.

"There are these new technologies that arrive treating heart attacks such as angioplasties and stents as ways to treat people with heart conditions, definitely raise the cost of treating heart conditions.  So health economists think that is what are driving the costs and doctors use them and that is why more is spent today than in 1980."

Aizcorbe says another takeaway from this study on the rise in healthcare costs is the recent growing emphasis on preventative care.  But she says there too, it’s hard to measure benefits when you try to match money spent with quality of life.  One person’s needless test may be a lifesaver for another. The World Health Organization has been looking into something called, ‘quality life years.’ That is whether this clear increase in spending on treatment is worth it.